ASSET PURCHASE AGREEMENT
by and among
Outsourcing Solutions Inc.,
ABC Acquisition Company,
Accelerated Bureau of Collections Inc.,
Accelerated Bureau of Collections of Ohio, Inc.,
Accelerated Bureau of Collections of Virginia Inc.,
Accelerated Bureau of Collections of Massachusetts Inc.
and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TABLE OF CONTENTS
ASSET PURCHASE AGREEMENT
SECTION PAGE
ASSET PURCHASE AGREEMENT.....................................................1
RECITALS.....................................................................1
ARTICLE I....................................................................1
DEFINITIONS...............................................................1
ADS.......................................................................1
ADS.......................................................................1
Affiliate.................................................................1
Arbiter...................................................................1
Assets....................................................................1
Assignment and Assumption Agreement.......................................2
Assumed Liabilities.......................................................2
Balance Sheet Date........................................................3
▇▇▇▇ of Sale..............................................................3
Business..................................................................3
Buyer.....................................................................3
Closing...................................................................3
Closing Consideration.....................................................3
Closing Date..............................................................3
Closing Date Balance Sheet................................................3
Closing Date Statement....................................................3
Closing Financial Statements..............................................3
Closing Working Capital...................................................3
Code......................................................................3
Contract..................................................................4
Court.....................................................................4
Current Assets............................................................4
Current Liabilities.......................................................4
Dollars...................................................................4
Effective Time............................................................4
Employment Agreements.....................................................4
Excluded Assets...........................................................4
Final Purchase Price......................................................4
Financial Statements......................................................4
GAAP......................................................................4
Government................................................................4
Intellectual Property.....................................................4
Interim Balance Sheet.....................................................5
Interim Statements........................................................5
"Knowledge"...............................................................5
Law.......................................................................5
Liabilities...............................................................5
Lien......................................................................5
Notice of Dispute.........................................................5
Ordinary Course...........................................................5
Party.....................................................................6
Permitted Liens...........................................................6
Person....................................................................6
Plan......................................................................6
"Premises"................................................................6
Purchased Assets..........................................................6
Returns...................................................................6
Sellers...................................................................6
Sellers Group.............................................................6
Sellers Group Person......................................................6
Taxes.....................................................................6
"Working Capital Target"..................................................7
ARTICLE II...................................................................7
PURCHASE AND SALE OF ASSETS...............................................7
2.1 Assets to be Purchased................................................7
2.2 Assumed Liabilities...................................................7
2.3 Closing Consideration.................................................7
2.4 Post-Closing Adjustments to Closing Consideration....................7
2.5 Allocation of Consideration...........................................8
2.6 Closing...............................................................8
2.7 Deliveries of Sellers at Closing......................................8
2.8 Deliveries of Buyer at Closing........................................8
2.9 Closing Date Balance Sheet and Statement..............................8
ARTICLE III.................................................................10
REPRESENTATIONS AND WARRANTIES OF SELLERS................................10
3.1 Corporate Existence and Power of Sellers.............................10
3.2 Approval and Enforceability of Agreement.............................10
3.3 Financial Statements.................................................10
3.4 Events Subsequent to December 31, 1996...............................11
3.5 Assets in Possession of Others.......................................12
3.6 Accounts and Notes Receivable........................................12
3.7 Undisclosed Liabilities..............................................12
3.8 Taxes................................................................12
3.9 Real Property - Owned................................................14
3.10 Personal Property - Owned...........................................14
3.11 Real and Personal Property - Leased from Sellers....................14
3.12 Real and Personal Property - Leased to Sellers......................14
3.13 Intellectual Property...............................................15
3.14 Necessary Property and Transfer of Purchased Assets.................16
3.15 Use and Condition of Property.......................................16
3.16 Licenses and Permits................................................16
3.17 Contracts--Disclosure...............................................17
3.18 Contracts--Validity, Etc............................................18
3.19 No Breach of Law or Governing Document..............................18
3.20 Litigation and Arbitration..........................................19
3.21 Directors, Officers, Employees and Consultants......................19
3.22 Indebtedness to and from Directors, Officers and Others.............19
3.23 Outside Financial Interests.........................................19
3.24 Payments, Compensation and Perquisites of Agents and Employees......20
3.25 Labor Contracts, Employee Benefit Plans, and Employment Contracts...20
3.26 ERISA...............................................................20
3.27 Terminated Plans....................................................21
3.28 Overtime, Back Wages, Vacation and Minimum Wages....................21
3.29 Discrimination and Occupational Safety and Health...................21
3.30 Alien Employment Eligibility........................................21
3.31 Labor Disputes; Unfair Labor Practices..............................22
3.32 Insurance Policies..................................................22
3.33 Guarantees..........................................................22
3.34 Environmental Matters...............................................22
3.35 Broker's Fees.......................................................23
3.36 Foreign Assets......................................................23
3.37 Foreign Operations and Export Control...............................24
3.38 Books and Records...................................................24
3.39 Truthfulness........................................................24
ARTICLE IV..................................................................24
REPRESENTATIONS AND WARRANTIES OF BUYER..................................24
4.1 Corporate Existence of Buyer.........................................24
4.2 Approval of Agreement................................................24
4.3 No Breach of Articles or Indentures..................................24
ARTICLE V...................................................................25
COVENANTS CONCERNING SELLERS.............................................25
5.1 Operation of the Business............................................25
5.2 Preservation of Business.............................................26
5.3 Insurance and Maintenance of Property................................26
5.4 Full Access..........................................................26
5.5 Books, Records and Financial Statements..............................26
5.6 Governmental Filings.................................................27
5.7 Tax Matters..........................................................27
5.8 Employees............................................................27
ARTICLE VI..................................................................28
CHANGE OF NAME...........................................................28
6.1 Change of Name.......................................................28
ARTICLE VII.................................................................28
CONDITIONS TO BUYER'S OBLIGATIONS........................................28
7.1 Representations and Warranties of Sellers............................28
7.2 Performance of this Agreement........................................28
7.3 Material Adverse Change and Extraordinary Distributions..............28
7.4 Certificate of Sellers...............................................29
7.5 Opinion of Counsel...................................................29
7.6 Employment Agreements................................................29
7.7 No Lawsuits..........................................................29
7.8 No Restrictions......................................................30
7.9 Consents.............................................................30
7.10 Releases............................................................30
7.11 Documents...........................................................30
7.12 Further Assurances..................................................30
ARTICLE VIII................................................................30
CONDITIONS TO SELLERS' OBLIGATIONS.......................................30
8.1 Representations and Warranties of Buyer..............................31
8.2 Performance of this Agreement........................................31
8.3 Certificate of Buyer.................................................31
8.5 Employment Agreements................................................31
8.6 Payment of Closing Consideration and Assumption of
Assumed Liabilitie...................................................31
8.7 Further Assurances...................................................31
ARTICLE IX..................................................................31
INDEMNIFICATION..........................................................31
9.1 Survival of Representations and Warranties...........................31
9.2 Sellers' Indemnification.............................................31
9.3 Buyer's Indemnification..............................................32
9.4 Notice of Claim......................................................32
9.5 Right to Contest Claims of Third Persons.............................32
9.6 Limitations..........................................................33
ARTICLE X...................................................................33
MISCELLANEOUS............................................................33
10.1 Assignment; Binding Agreement.......................................33
10.2 Termination of Agreement............................................34
10.3 Manner and Effect of Termination....................................34
10.4 Non-Disclosure of Information.......................................34
10.5 Transfer Taxes and Expenses.........................................35
10.6 Bulk Sales..........................................................35
10.7 Remedies............................................................35
10.8 Entire Agreement and Modification...................................35
10.9 Severability........................................................35
10.10 Counterparts.......................................................35
10.11 Headings; Interpretation...........................................36
10.12 Governing Law......................................................36
10.13 Payment of Fees and Expenses.......................................36
10.14 Sellers Group Representative.......................................36
10.15 Liabilities After Effective Time...................................36
10.16 Notices............................................................36
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the"Agreement") is made as of this 10th day
of November 1997, by and among, on one hand, Outsourcing Solutions Inc., a
Delaware corporation ("OSI"), and ABC Acquisition Company, a Colorado
corporation and a wholly-owned subsidiary of OSI ("Buyer"), and on the other
hand, Accelerated Bureau of Collections, Inc., a Colorado corporation ("ABC
Inc."), Accelerated Bureau of Collections of Ohio, Inc., a Ohio corporation
("ABC Ohio"), Accelerated Bureau of Collections of Virginia, Inc., a Virginia
corporation ("ABC Virginia") and Accelerated Bureau of Collections of
Massachusetts, Inc., a Massachusetts corporation ("ABC Massachusetts") (each,
a"Seller" and together, the"Sellers") and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the"Stockholder").
Certain defined terms are set forth in Article I.
RECITALS
Buyer desires to purchase from Sellers the Purchased Assets on the
following terms and conditions; and
Sellers desire to sell to Buyer the Purchased Assets on the following terms
and conditions.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
covenants, representations, warranties, conditions and agreements hereinafter
expressed, the Parties agree as follows:
ARTICLE I
DEFINITIONS
"ADS" means Accelerated Data Systems, Inc., a Colorado
corporation.
"ADS Collection System" means that collection of computer software,
programs, source code and design documents which support the business of
Sellers.
"Affiliate" means a Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Person referred to. In this definition,"control" means the possession, direct or
indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through ownership of securities, by contract, or
otherwise.
"Arbiter" means the individual appointed under Section 2.9(d).
"Assets" means all assets and property and associated rights and interests,
real, personal and mixed, tangible and intangible, of whatever kind, owned or
used by Sellers. Without limiting the generality of the foregoing, the Assets
include the following items:
(a) all assets reflected and/or described on the Interim Balance
Sheet, except any such assets which have been disposed of in the Ordinary Course
of the Business since the Balance Sheet Date;
(b) all assets owned or used by Sellers which have been fully
depreciated or written off;
(c) all assets acquired by Sellers since the Balance Sheet Date;
(d) all accounts receivable of Sellers;
(e) all inventories of Sellers, including but not limited to all
supplies;
(f) all Intellectual Property of Sellers (and for the avoidance of
doubt this does not include Intellectual Property of ADS including but not
limited to the ADS Collection System as more specifically described herein) and
documentation thereof and the right and power to assert, defend and recover
title thereto and the right to recover for past damages on account of the
infringement, misuse, or theft thereof;
(g) all records, including business, computer, engineering and other
records, and all associated documents, discs, tapes and other storage or
recordkeeping media of Sellers, including but not limited to all sales data,
customer lists, accounts, bids, contracts, supplier records and other data and
information of the Business;
(h) all of Sellers' rights and claims against others under Contracts;
and
(i) all other claims against others, rights and choses in action,
liquidated or unliquidated, of Sellers arising from the Business, including
those arising under insurance policies and those related to the Assumed
Liabilities.
"Assignment and Assumption Agreement" means the form of
instrument set forth as Exhibit 1.1(a).
"Assumed Liabilities" means Liabilities of Sellers to the
extent they are:
(a) Liabilities that are (i) Current Liabilities quantified on the
Closing Financial Statements, (ii) the long-term liabilities reflected on the
Closing Date Balance Sheet and (iii), if incurred after the date of this
Agreement, incurred in compliance with this Agreement; or
(b) executory obligations arising from the Business which are not
required under GAAP to be quantified and included in the financial statements of
the Business and which (i) if required to be set forth on a Schedule, are so set
forth, (ii) are incurred under a Contract for the sale of goods or services by
Sellers (other than Contracts between any Seller and another Sellers Group
Person), (iii) are to be performed after the Effective Time and (iv), if
incurred after the date of this Agreement and prior to the Effective Time, are
incurred in compliance with this Agreement.
"Balance Sheet Date" means September 30, 1997.
"▇▇▇▇ of Sale" means the form of instrument set forth as Exhibit 1.1(b).
"Business" means the business and operations of Sellers including without
limitation the business generally conducted under the trade names"Accelerated
Bureau of Collections."
"Buyer" means ABC Acquisition Company, a Colorado corporation.
"Closing" means the consummation of the transactions contemplated by this
Agreement.
"Closing Consideration" means Thirty Two Million Dollars ($32,000,000).
"Closing Date" means November 10, 1997 or, if the conditions to Closing are
not by then satisfied, on such Closing Date as the Parties may agree to in
writing.
"Closing Date Balance Sheet" means the balance sheet prepared pursuant to
Section 2.9.
"Closing Date Statement" means the statement prepared pursuant to Section
2.9.
"Closing Financial Statements" means the Closing Date Balance Sheet and the
Closing Date Statement prepared pursuant to Section 2.9.
"Closing Working Capital" means total Current Assets minus total Current
Liabilities, as determined on the Closing Date Statement pursuant to Section
2.9.
"Code" means the Internal Revenue Code of 1986, as amended.
"Contract" means any contract, agreement, binding commitment or instrument,
purchase order or offer, written or oral, entered into or made by or on behalf
of Sellers.
"Court" means any court or judicial body of any Government.
"Current Assets" shall be determined in accordance with GAAP.
"Current Liabilities" shall be determined in accordance with GAAP but shall
not include the current portion of long-term liabilities.
"Dollars" or"$" means United States Dollars.
"Effective Time" means the effective time of the Closing, which shall be as
of 12:01 A.M. on November 1 1997.
"Employment Agreements" means the forms of employment and non-competition
agreements set forth as Exhibits 7.6(a), 7.6(b) and 7.6(c).
"Excluded Assets" means the Assets identified in Schedule 1.1(b).
"Final Purchase Price" means the Closing Consideration as adjusted pursuant
to Section 2.4.
"Financial Statements" means the 1996 Financial Statements and the 1995
Financial Statements. "1996 Financial Statements" means the Sellers' compiled
combined statement of assets and liabilities - income tax basis at December 31,
1996 and the related statements of revenues and expenses for the 12 month period
then ended."1995 Financial Statements" means the Sellers' compiled combined
statement of assets and liabilities - income tax basis at December 31, 1995 and
the related statements of revenues and expenses for the 12 month period then
ended.
"GAAP" means United States generally accepted accounting principles.
"Government" means the United States of America, any other nation or state,
and any federal, bilateral or multilateral governmental authority; and any
possession, territory, county, district, municipality, city or other
governmental unit or subdivision of any of the foregoing.
"Intellectual Property" means, to the extent any of the following are owned
by any Seller, trademarks, trade names, corporate names, service marks and
registrations thereof and applications therefor, together with that part of the
goodwill of the Business connected with the use of and symbolized by such marks;
patents, copyrights and computer software, both source code and executable code
(but excluding any non-transferable licenses of commercially available software
not created or customized for the Business), and registrations thereof and
applications therefor; inventions, discoveries, processes, ideas, designs,
methods, formulae, trade secrets, unregistered copyrights, proprietary technical
information, know-how and data; licenses, sublicenses, assignments and
agreements with respect to the foregoing; and all manuals, records and
documentation with respect to the foregoing.
"Interim Balance Sheet" means the statement of assets and liabilities at
September 30, 1997 included in the Interim Statements.
"Interim Statements" means the Interim Balance Sheet and the related
statements of revenues and expenses of the Sellers for the nine month period
then ended, together with any notes or schedules thereto.
"Knowledge" of any Person of or with respect to any matter means that such
Person (if a natural person) or any of the officers or directors of such Person
(if not a natural person) has actual awareness or knowledge of such matter or
would have actual knowledge or awareness after due inquiry of the books and
records of Sellers.
"Law" means any statute, law, treaty, ordinance, rule, regulation,
instrument, directive, decree, order or injunction of any Government,
quasi-governmental authority or Court, and includes rules or regulations of any
regulatory or self- regulatory authority compliance with which is required by
Law.
"Liabilities" means all liabilities and/or obligations, whether or not
required to be reflected on the financial statements of a business.
"Lien" means any security interest, mortgage, pledge, charge, adverse claim
or other encumbrance.
"Notice of Dispute" means a notice to Buyer delivered pursuant to Section
2.9, specifying in reasonable detail all points of disagreement with the Closing
Date Balance Sheet and Closing Date Statement.
"Ordinary Course" means, with respect to the Business, only the ordinary
course of commercial operations customarily engaged in by such business and
specifically does not include (a) activity (i) involving the purchase or sale of
such business or of any product line or business unit, (ii) involving
modification or adoption of any Plan or (iii) which requires approval by the
board of directors or shareholders of an entity engaged in such business or (b)
the incurrence of any liability for any tort or any breach or violation of or
default under any agreement or Law.
"Party" means any of Buyer, OSI, Sellers or Stockholder, and"Parties" means
all of them.
"Permitted Liens" means liens set forth on Schedule 1.1(c).
"Person" means any natural person; any corporation, partnership, company or
other corporate entity; and any Government.
"Plan" means any agreement, arrangement, plan or policy, qualified or
non-qualified, whether or not considered legally binding, that involves (a) any
pension, retirement, profit sharing, deferred compensation, bonus, stock option,
stock purchase, phantom stock, health, welfare or incentive plan; or (b) welfare
or"fringe" benefits, including without limitation any voluntary employees'
beneficiary associations or related trusts, vacation, severance, disability,
medical, hospitalization, dental, life and other insurance, tuition, company
car, club dues, income tax preparation, sick leave, maternity, paternity or
family leave, child care or other benefits; or (c) any employment, consulting,
engagement or retainer agreement or arrangement.
"Premises" means the Business premises leased by any Seller the lease with
respect to which will be assumed by Buyer.
"Purchased Assets" means the Assets excluding the Excluded Assets.
"Returns" means returns, reports, estimated tax and informational
statements and returns relating to Taxes which are, were or will be required by
Law to be filed by Sellers, and all information returns (e.g., Form W-2, Form
1099) and reports relating to Taxes or Plans. Any one of the foregoing Returns
may be referred to sometimes as a"Return."
"Sellers" means ABC Inc., ABC Ohio, ABC Virginia and ABC Massachusetts
"Sellers Group" means Sellers and Stockholder.
"Sellers Group Person" means a Person included in the Sellers Group.
"Taxes" means all taxes, charges, fees, levies or other like assessments
imposed or assessed by any Government, including without limitation income,
gross receipts, profits, windfall profit, employment (including Social Security,
state pension plans and unemployment insurance), withholding, payroll,
franchise, gross receipts, sales, use, transfer, stamp, occupation, real or
personal property, ad valorem, value added, premium and excise taxes; Pension
Benefit Guaranty Corporation premiums and any other like Government charges; and
shall include all penalties, fines, assessments, additions to tax and interest
resulting from, attributable to, or incurred in connection with such Taxes or
any contest or dispute thereof. Any one of the foregoing Taxes may be referred
to sometimes as a"Tax."
"Working Capital Target" shall mean $100,000 plus one- half the aggregate
amount of the long-term liabilities reflected in the Closing Date Balance Sheet
(including the current portion thereof).
ARTICLE II
PURCHASE AND SALE OF ASSETS
2.1 Assets to be Purchased. Subject to the terms and conditions hereof, on
the Closing Date and as of the Effective Time, Sellers agree to sell to Buyer,
free and clear of all Liens other than Permitted Liens, all right, title and
interest of Sellers to and in all of the Purchased Assets.
2.2 Assumed Liabilities
(a) Subject to the terms and conditions hereof, on the Closing Date
and as of the Effective Time, Buyer agrees to assume only the Assumed
Liabilities.
(b) Notwithstanding the foregoing, if the assignment or transfer of
any obligation or instrument would cause a breach thereof and if no required
consent to such assignment or transfer has been obtained, then, at Buyer's
election and in its reasonable discretion such obligation or instrument shall
not be assigned or transferred, but Buyer shall act as agent for Sellers in
order to obtain for Buyer the benefits under such obligation or instrument.
(c) EXCEPT AS EXPRESSLY AND UNAMBIGUOUSLY PROVIDED IN THIS SECTION 2.2
OR ELSEWHERE IN WRITING, NEITHER BUYER NOR ANY AFFILIATE OF BUYER ASSUMES OR
AGREES TO BECOME LIABLE FOR OR SUCCESSOR TO ANY LIABILITIES OR OBLIGATIONS
WHATSOEVER, LIQUIDATED OR UNLIQUIDATED, KNOWN OR UNKNOWN, CONTINGENT OR
OTHERWISE, WHETHER OF SELLERS, ANY AFFILIATE OF SELLERS, ANY PREDECESSOR
THEREOF, OR ANY OTHER PERSON, OR OF THE BUSINESS.
2.3 Closing Consideration. In consideration for the sale of the Purchased
Assets, Buyer shall (i) pay to Sellers the Closing Consideration, adjusted as
described in Section 2.4 and (ii) assume the Assumed Liabilities.
2.4 Post-Closing Adjustments to Closing Consideration
(a) To the extent the Closing Working Capital is greater than the
Working Capital Target, the Closing Consideration shall (on a post-closing basis
pursuant to Section 2.4(b)) be increased on a dollar-for-dollar basis by an
amount equal to such excess. To the extent the Closing Working Capital is less
than the Working Capital Target, the Closing Consideration shall (on a
post-closing basis pursuant to Section 2.4(b)) be decreased on a
dollar-for-dollar basis by an amount equal to such deficit. The Closing
Consideration as so adjusted is hereinafter referred to as the"Final Purchase
Price." The Closing Working Capital and the Final Purchase Price shall be
determined based on the Closing Financial Statements (as finally determined
under Section 2.9).
(b) Not more than 5 business days after final determination of the
Final Purchase Price in the manner specified in Section 2.9, (i) Buyer shall pay
to Sellers the amount, if any, by which the Final Purchase Price exceeds the
Closing Consideration, or (ii) Sellers shall pay to Buyer the amount, if any, by
which the Final Purchase Price is less than the Closing Consideration. Any
payment or distribution from Buyer or Sellers so required to be made shall be by
wire transfer of immediately available funds and shall bear interest from the
Closing Date through the date of payment at the prime lending rate of Citibank,
N.A. from time to time prevailing.
2.5 Allocation of Consideration. The consideration provided for in Section
2.4 shall be allocated among the Sellers and the Purchased Assets as provided in
Schedule 2.5 hereto, or as mutually agreed to in writing by the Parties after
the determination of the Final Purchase Price. Such allocation shall be prepared
in accordance with Section 1060 of the Code.
2.6 Closing. The Closing shall take place at 10:00 a.m. on the Closing Date
at the offices of ▇▇▇▇▇ ▇▇▇▇ LLP, St. Louis, Missouri.
2.7 Deliveries of Sellers at Closing. At Closing, subject to the conditions
to the Sellers' obligations in Article VIII, Sellers shall execute and deliver
or cause to be delivered the documents identified in Article VII.
2.8 Deliveries of Buyer at Closing. At Closing, subject to the conditions
to the Buyer's obligations in Article VII, Buyer shall (a) execute and deliver
or cause to be delivered the documents identified in Article VIII and (b)
transfer the Closing Consideration by wire transfer of immediately-available
funds to an account or accounts designated by Sellers.
2.9 Closing Date Balance Sheet and Statement.
(a) Buyer, in cooperation with Sellers, shall prepare a closing date
balance sheet of the Sellers ("Closing Date Balance Sheet") and a closing date
statement (the"Closing Date Statement"), each as of the Effective Time and each
prepared in accordance with Section 2.9(b). The Closing Date Balance Sheet shall
also be prepared in accordance with Section 5.7(a). The Closing Date Statement
shall reflect Closing Working Capital, as of the Effective Time. The Closing
Date Balance Sheet and the Closing Date Statement are herein referred to as
the"Closing Financial Statements." Buyer shall deliver the Closing Financial
Statements to Sellers Group Representative not later than 60 calendar days after
the Closing Date.
(b) Notwithstanding that Sellers' historical financial statements have
been prepared with certain variations from GAAP (as set forth on Schedule 3.3),
the Closing Financial Statements shall be prepared in accordance with GAAP, with
all appropriate accruals and reserves.
(c) If Sellers dispute the Closing Financial Statements or the
resulting calculation of the Final Purchase Price, as delivered by Buyer,
Sellers Group Representative shall deliver to Buyer a Notice of Dispute within
ten business days after the date Sellers Group Representative receives the
Closing Financial Statements(the"Dispute Period"). If during the Dispute Period
Sellers Group Representative fails to deliver a Notice of Dispute, the Closing
Financial Statements shall be deemed final and binding at the end of the Dispute
Period.
(d) Upon receipt of the Notice of Dispute within the Dispute Period,
Buyer shall promptly consult with Sellers Group Representative with respect to
Sellers' specified points of disagreement in an effort to resolve the dispute.
If any such dispute cannot be resolved by Buyer and Sellers Group Representative
within 20 calendar days after Buyer receives the Notice of Dispute, they shall
refer the dispute to a partner in KPMG Peat Marwick, certified public
accountants (the"Arbiter"), as an arbitrator to finally determine, as soon as
practicable, and in any event within 30 calendar days after such reference, all
points of disagreement with respect to the Closing Financial Statements. For
purposes of such arbitration, each Party shall submit proposed Closing Financial
Statements. The Arbiter shall apply the terms of Section 2.9(b) of this
Agreement and shall otherwise conduct the arbitration under such procedures as
the Parties may agree or, failing such agreement, under the Commercial Rules of
the American Arbitration Association. The fees and expenses of the arbitration
and the Arbiter incurred in connection with the arbitration of the Closing
Financial Statements shall be allocated between the Parties by the Arbiter in
proportion to the extent either Party did not prevail on items in dispute in the
Closing Financial Statements; provided, that such fees and expenses shall not
include, so long as a Party complies with the procedures of this Section 2.9(d),
the other Party's outside counsel or accounting fees. All determinations by the
Arbiter shall be final, conclusive and binding with respect to the Closing
Financial Statements and the allocation of arbitration fees and expenses.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLERS
Sellers and Stockholder, jointly and severally, hereby make the following
representations and warranties, each of which Sellers and Stockholder represent
and warrant is true and correct on the date hereof and each of which shall
survive the Closing Date and the transactions contemplated hereby to the extent
provided in Section 9.1.
3.1 Corporate Existence and Power of Sellers.
(a) Each Seller has delivered to Buyer a copy of its certificate of
incorporation, certified by its secretary. Each Seller is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation.
(b) Each Seller has the corporate power and authority to own and use
its assets and to transact the business in which it is engaged, holds all
franchises, licenses and permits necessary and required therefor, is duly
licensed or qualified to do business as a foreign corporation and is in good
standing in each jurisdiction where failure of such Seller to be so licensed or
qualified could be expected to have a material adverse affect on any of the
Assets or on any Seller's ability to perform its obligations under the
Agreement. Each Seller has the power to enter into this Agreement, to perform
its obligations hereunder and to consummate the transactions contemplated
hereby.
3.2 Approval and Enforceability of Agreement.
(a) The execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized, approved and
ratified by all necessary action on the part of the Sellers Group. Each Seller
has delivered to Buyer correct and complete copies of the resolutions of such
Seller, certified by its secretary, giving authorization and approval of the
transactions contemplated hereby. Such resolutions have not been altered,
amended or revoked. Pursuant to such resolutions, each Seller has full authority
to enter into and deliver this Agreement, to perform its obligations hereunder
and to consummate the transactions contemplated hereby.
(b) Assuming due execution and delivery hereof by Buyer, this
Agreement is the legal, valid and binding obligation of each Sellers Group
Person, enforceable against each according to its terms.
3.3 Financial Statements.
(a) Sellers have delivered to Buyer correct and complete copies of the
Financial Statements and Interim Statements. The Financial Statements are
compiled by ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, certified public accountant, and his reports
are appended thereto.
(b) The Financial Statements and Interim Statements were derived from
the books and records of the Sellers and (i) are true, complete and correct in
all material respects and (ii) present fairly, in all material respects, the
financial position, results of operations and cash flows of the Business at the
dates and for the periods indicated. The Interim Statements have been prepared
in accordance with GAAP.
3.4 Events Subsequent to December 31, 1996. To the Knowledge of each
Seller, since December 31, 1996, except as set forth in the Interim Statements
and on Schedule 3.4, there has been no:
(a) change in the business, condition (financial or otherwise),
operations or prospects of any Seller other than changes in the Ordinary Course,
which individually or in the aggregate has been materially adverse;
(b) material damage, destruction or loss, whether covered by insurance
or not, affecting any Purchased Assets;
(c) declaration, setting aside or payment of any distribution (in cash
or in kind) with respect to any securities of Sellers;
(d) increase in or commitment to materially increase compensation,
benefits or other remuneration to or for the benefit of any officer, employee or
agent of any Seller, or, in connection with the Business, any other Person or
any benefits granted under any Plan with or for the benefit of any such officer,
employee, agent or Person;
(e) transaction entered into or carried out by any Seller other than
in the Ordinary Course;
(f) borrowing or incurrence of any indebtedness, contingent or other,
by or on behalf of any Seller, or any endorsement, assumption or guarantee of
payment or performance of any Indebtedness or Liability of any other Person or
entity by any Seller;
(g) change made by any Seller in its Tax or financial accounting or
any Tax election including without limitation the election to be treated as an S
Corporation within the meaning of Section 1361 of the Code;
(h) grant of any Lien with respect to the Purchased Assets;
(i) transfer of any Assets other than arm's length sales, leases or
dispositions in the Ordinary Course of the Business;
(j) material modification or termination of any Contract or any
material term thereof;
(k) lease or acquisition of any capital assets included in the
Purchased Assets with a value greater than $10,000 per item;
(l) loan or advance to any Person; or
(m) commitment or agreement by any Seller to do any of the foregoing
items (c) through (l).
3.5 Assets in Possession of Others. To the Knowledge of the Sellers, except
as set forth on Schedule 3.5, no Seller holds title to or ownership of any
material Assets in the possession of others.
3.6 Accounts and Notes Receivable. To the Knowledge of Sellers, all
accounts and notes receivable reflected on the Interim Balance Sheet, and all
accounts and notes receivable accruing subsequently to the Balance Sheet Date
(except those which have been collected since the Balance Sheet Date), are (a)
valid, genuine and subsisting, (b) subject to no defenses, set-offs,
counterclaims, security interests or other encumbrances, and (c) current and
collectible. All accounts receivable of Sellers in existence on the Closing Date
will be paid in full, net of applicable reserves, on or before 270 calendar days
after the Closing Date, less any discounts set forth on Schedule 3.6.
3.7 Undisclosed Liabilities. To the Knowledge of the Sellers, no Seller has
any Liabilities whatsoever, known or unknown, asserted or unasserted, liquidated
or unliquidated, accrued, absolute, contingent or otherwise, and there is no
basis for any claim against any Seller for any such Liability except (a) to the
extent reflected on the Interim Balance Sheet, (b) to the extent set forth on
Schedule 3.4, or (c) Liabilities incurred in the Ordinary Course of the Business
since the Balance Sheet Date, none of which will, or could, have a material
adverse effect upon the business, condition (financial or otherwise), operations
or prospects of the Business.
3.8 Taxes.
(a) All Returns required to be filed by any Seller on or prior to the
Closing Date with respect to Taxes have been or will be timely filed.
(b) All amounts shown on each of such Returns have been paid or will
be paid when due.
(c) Any Taxes which are to be assumed by Buyer in respect of the
Purchased Assets which at the Closing Date are not yet due and owing will be
adequately reflected on the Closing Balance Sheet as a reserve for Taxes.
(d) There are no grounds for the assertion or assessment of any Taxes
against Seller, the Purchased Assets or the Business other than those reflected
or reserved against on the Closing Balance Sheet.
(e) Neither the Purchased Assets nor the Business are and will not be
encumbered by any liens arising out of any unpaid Taxes and there are no grounds
for the assertion or assessment of any liens against the Assets or the Business
in respect of any Taxes.
(f) The transactions contemplated by this Agreement will not give rise
to (i) the creation of any liens against the Purchased Assets or the Business in
respect of any Taxes or (ii) the assertion of any additional Taxes against the
Purchased Assets or the Business.
(g) There is no action or proceeding or unresolved claim for
assessment or collection, pending or threatened, by, or present or expected
dispute with, any governmental authority for assessment or collection from
Seller of any Taxes of any nature affecting the Purchased Assets or the
Business.
(h) There is no extension or waiver of the period for assertion of any
Taxes against any Seller affecting the Purchased Assets or the Business.
(i) No Seller is a"foreign person" within the meaning of Section
1445(f)(3) of the Internal Revenue Code of 1986, as from time to time amended
(the"Code").
(j) None of the Purchased Assets or Assumed Liabilities is subject to,
or constitutes, a safe harbor lease within the meaning of Section 168(f)(8) of
the Code.
(k) None of the Purchased Assets has been financed with, or directly
or indirectly secures, any industrial revenue bonds or debt, the interest on
which is tax exempt under Section 103(a) of the Code.
(l) None of the Purchased Assets or Assumed Liabilities will
constitute a partnership, joint venture, or other arrangement or contract that
could be treated as a partnership for federal income tax purposes.
(m) None of the Purchased Assets consists of stock in a subsidiary of
any Seller.
(n) None of the Purchased Assets is tax-exempt use property within the
meaning of Section 168(h) of the Code.
(o) None of the Purchased Assets is subject to a tax indemnification
agreement.
3.9 Real Property - Owned. No Seller has any interest in, or any right or
obligation to acquire any interest in, any parcel of real property.
3.10 Personal Property - Owned. Each Seller has good and marketable title
to all of the personal property included in the Purchased Assets owned by such
Seller, including all personal property reflected on the Interim Balance Sheet
or acquired after the date thereof (except any personal property subsequently
sold in the Ordinary Course of the Business), free and clear of all options,
Liens, leases, covenants, conditions, agreements and other restrictions of every
kind and there exists no restriction on the use or transfer of such property.
Sellers, as a group, have good and marketable title to all of personal property
included in the Purchased Assets.
3.11 Real and Personal Property - Leased from Sellers. No Seller is a
lessor of any real or personal property.
3.12 Real and Personal Property - Leased to Sellers.
(a) Set forth on Schedule 3.12(a) hereto is a description of each
lease under which any Seller is the lessee of any real property, and on Schedule
3.12(b) hereto is a description of each lease under which any Seller is the
lessee of any personal property. Sellers have delivered to Buyer a true, correct
and complete copy of each lease identified on Schedules 3.12(a) or 3.12(b). The
premises or property described in said leases are presently occupied or used by
such Seller as lessee under the terms of such leases. Except as set forth on
Schedules 3.12(a) or 3.12(b), all rentals due under such leases have been paid,
and there exists no default under the terms of such leases, and no event has
occurred which, upon passage of time or the giving of notice, or both, would
result in any event of default or prevent Sellers from exercising and obtaining
the benefits of any rights or options contained therein. Sellers have all right,
title and interest of the lessee under the terms of said leases, free of all
Liens and all such leases are valid and in full force and effect.
(b) Consent is necessary for the assignment of all leases set forth on
Schedules 3.12(a) or 3.12(b) under which any Seller or any Seller is lessee to
Buyer. Upon Closing, subject to Buyer's obtaining lessor consent, Buyer will
have all right, title and interest of the lessee under the terms of such leases,
free of all Liens.
(c) There is no default or basis for acceleration or termination
under, nor has any event occurred nor does any condition exist which with the
passage of time or the giving of notice, or both, would constitute a default or
basis for acceleration under any underlying lease, agreement, mortgage or deed
of trust, which default or basis for acceleration would materially adversely
affect any lease described on Schedules 3.12(a) or 3.12(b) or the property or
use of the property covered by such lease. There will be no default or basis for
acceleration under any such underlying lease, agreement, mortgage or deed of
trust as a result of the transactions provided for in this Agreement.
3.13 Intellectual Property. Set forth on Schedule 3.13 hereto is a list of
all material Intellectual Property owned, used, licensed or assigned by or to a
Sellers Group Person or by or to any Seller. Except as set forth on Schedule
3.13:
(a) all such Intellectual property is valid and enforceable;
(b) good and marketable title to, or the unrestricted right to use,
all such Intellectual Property, together with all common law rights to the
subject matter thereof, is held by Sellers and/or any Seller, free and clear of
all Liens;
(c) the use, licensing or sale by or to Sellers and/or any Seller of
any of the Intellectual Property does not require the acquiescence, agreement or
consent of any third party, and there exists no restriction on the use or
transfer of any such item;
(d) the conduct of the Business does not contravene, conflict with,
violate or infringe upon any Intellectual Property right of a third party and no
proprietary information or trade secret has been misappropriated by any Seller
and/or from any other Seller from any third party.
(e) such Intellectual Property is not subject to a challenge or claim
of infringement, interference or unfair competition or other claim and, to the
best knowledge of each Sellers Group Person, such Intellectual Property is not
being infringed upon or violated by any third party.
(f) there are no interferences, challenges, proceedings or
infringement suits pending or, to the best knowledge of each Sellers Group
Person, threatened with respect to any such Intellectual Property; and
(g) no Sellers Group Person has granted a license in such Intellectual
Property to any other party, and to the best knowledge of each Sellers Group
Person, no license, assignment or other transfer of such Intellectual Property
has been granted or made by any third party having a right to do so that would
materially adversely affect the Business.
3.14 Necessary Property and Transfer of Purchased Assets. The Purchased
Assets constitute all of Sellers' property and material property rights now
used, useful or necessary in any material respect for the conduct, as of the
Closing Date, of the Business in the manner and to the extent presently
conducted by Sellers. Seller makes no representation or warranty about the
sufficiency of the Purchased Assets in connection with any future or planned
conduct of the Business by Buyer. Except as set forth in Section 3.18 or
elsewhere in the Agreement, to the Knowledge of Sellers, no consent is necessary
to, and there exists no restriction on, the transfer of any of the Purchased
Assets to Buyer. To the knowledge of Sellers, there exists no condition,
restriction or reservation affecting the title to or utility of, in any material
respect, the Purchased Assets or Assumed Liabilities which would prevent Buyer
from occupying or utilizing the Purchased Assets or enforcing the material
rights thereunder, or any part thereof, to the same full extent that Sellers
might continue to do so if the sale and transfer contemplated hereby did not
take place. Upon the Closing, good and marketable title to the Purchased Assets
shall be vested in Buyer free and clear of all taxes and Liens other than
Permitted Liens.
3.15 Use and Condition of Property.
(a) To the Knowledge of each Seller owning the same, all of the
Purchased Assets are in good operating condition and repair as required in all
material respects for their use in the Business as presently conducted or
planned and conform to all applicable Laws, and no notice of any violation of
any Law relating to any of such property or assets has been received by Sellers
except such as have been fully complied with. To the Knowledge of the applicable
Seller, all improvements leased pursuant to the Assumed Liabilities comply with
all applicable zoning and building code ordinances and all applicable fire,
environmental, occupational safety and health standards and similar standards
established by Law, and the same use thereof by Buyer will not result in any
violation of any such code, ordinance or standard which would materially
adversely affect the Business or the Purchased Assets. To the Knowledge of any
Sellers Group Person, there is no pending, proposed, or threatened change in any
such code, ordinance or standard which would materially adversely affect the
Business or the use of the Purchased Assets.
(b) To the Knowledge of any Sellers Group Person, there is no pending,
proposed, or threatened condemnation proceeding or similar action affecting the
Purchased Assets or with respect to any streets or public amenities appurtenant
thereto or in the vicinity thereof which would materially adversely affect the
Business or the use of the Purchased Assets.
3.16 Licenses and Permits. Set forth on Schedule 3.16 hereto is a
description of each license or permit which, to the Knowledge of Sellers, is
required for the conduct of the Business together with the name of the
government agency or entity issuing such license or permit. Such licenses and
permits are valid and in full force and effect. Such licenses and permits are
not transferable by Sellers.
3.17 Contracts--Disclosure. Except as set forth in Schedule 3.17 or
elsewhere in the Agreement and the Schedules hereto, there is not, to the
Knowledge of Sellers, outstanding:
(i) Any single Contract providing for an expenditure by any of
Sellers in excess of $5,000, Contracts with the same or affiliated vendor(s)
providing for an expenditure by any Seller in excess of $10,000, or any
Contracts in the aggregate providing for expenditures by any Seller in excess of
$10,000, for the purchase of any real property, machinery, equipment or other
items which are in the nature of capital investment.
(ii) Any single Contract providing for an expenditure by any of
Sellers in excess of $5,000, Contract with the same or affiliated vendor(s)
providing for an expenditure by any Seller in excess of $10,000, or Contracts in
the aggregate providing for expenditures by any Seller in excess of $10,000, for
the purchase of raw materials, supplies, component parts or any other items or
services.
(iii) Any Contract to sell products or to provide services to
third Persons which (i) is at a price which would result in a net loss on the
sale of such products or providing of such services, (ii) is pursuant to terms
or conditions which any of Sellers or any Seller cannot reasonably expect to
satisfy or fulfill in their entirety, or (iii) involves more than $5,000 or
which, together with all other Contracts to or with the same party or affiliated
parties, involves more than $10,000.
(iv) Any Contract for materials, supplies, component parts or
other items or services in excess of the normal, ordinary, usual and current
requirements of the Business or at a price in excess of the current reasonable
market price.
(v) Any revocable or irrevocable indemnity or power of attorney.
(vi) Any evidence of indebtedness, loan agreement, indenture,
promissory note, letter of credit, foreign exchange contract, conditional sales
agreement or other similar type of agreement.
(vii) Any Contract which involves (i) a sharing of profits, (ii)
future payments of $10,000 or more per annum to other Persons or (iii) any joint
venture, partnership or similar arrangement.
(viii) Any Contract involving any sales agency, sales
representation, distributorship or franchise.
(ix) Any Contract containing covenants limiting the freedom of
any of Sellers to compete in any line of business or with any Person or in any
area.
(x) Any Contract not made in the Ordinary Course of the Business.
(xi) Any other material Contract which is not cancelable without
penalty on 30 calendar days' notice or less and which is not set forth on
another Schedule.
3.18 Contracts--Validity, Etc.
(a) Each Contract is a valid and binding obligation of the parties
thereto, enforceable in accordance with its terms and in full force and effect.
(b) No Seller is in breach or violation of any Contract or default
thereunder. To the Knowledge of the applicable Seller, the other party to any
Contract is not in breach or violation thereof or default thereunder. No event
has occurred which, through the passage of time or the giving of notice, or
both, would constitute, and neither the execution of this Agreement nor the
completion of the Closing does or will constitute or result in, a material
breach or violation of or default under any Contract, or would cause the
acceleration of any obligation of any party thereto or the creation of a Lien
upon any Asset.
(c) Each Contract will be duly assigned to Buyer on the Closing Date
and upon such assignment, subject to Buyer obtaining the consent of the other
party thereto, Buyer will acquire all right, title and interest of Sellers in
and to such Contract and will be substituted for such Sellers under the terms of
such Contract.
3.19 No Breach of Law or Governing Document. To the Knowledge of the
Sellers, no Seller is in default under or in violation of (a) any applicable Law
of any Government (including, without limitation, the Fair Debt Collection
Practices Act and any state or local counterpart or equivalent), (b) any
franchise or license, or (c) any provision of its articles or certificate of
incorporation or association or bylaws. Neither the execution of this Agreement
nor the completion of the Closing does or will, to the Knowledge of Sellers,
constitute or result in any such default, breach or violation. No Seller is
required to obtain any Government permits or consents to effect the transactions
contemplated hereby. No Ultimate Parent Entity of Sellers, together with all
entities it controls, is a $10 million person under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇
Antitrust Improvement Act of 1976, or the rules relating thereto (the"H-S-R").
As used in this Section 3.19, the terms"Ultimate Parent Entity,""control"
and"$10 million person" shall be defined by the H-S-R.
3.20 Litigation and Arbitration. To the Knowledge of Sellers, except as set
forth on Schedule 3.20 hereto and except with respect to claims from debtors and
employees arising in the Ordinary Course, there is no suit, claim, action or
proceeding now pending or, to the Knowledge of any Seller, threatened before any
Court, grand jury, administrative or regulatory body, governmental agency,
arbitration or mediation panel or similar body, nor except with respect to
potential claims from debtors and employees arising in the Ordinary Course are
there any grounds therefor, to which any of Sellers and/or any Seller is a party
or which may result in any judgment, order, decree, liability, award or other
determination which will, or could, have any material adverse effect upon any
Purchased Asset or upon the business, condition (financial or otherwise),
operations or prospects of the Business. No such judgment, order, decree or
award has been entered against any of Sellers or against any Seller, nor has any
such liability been incurred which has, or could have, such effect. There is no
claim, action or proceeding now pending or, to the Knowledge of any Sellers
Group Person, threatened before any Court, grand jury, administrative or
regulatory body, governmental agency, arbitration or mediation panel or similar
body which will, or could, prevent or hamper the consummation of the
transactions contemplated by this Agreement.
3.21 Directors, Officers, Employees and Consultants. Set forth on Schedule
3.21 hereto is a complete list of:
(a) all directors of each of Sellers;
(b) all officers (with office held) of each of Sellers;
(c) all hourly employees of Sellers who earn $25,000 or more per year
and all salaried employees of Sellers; and
(d) all consultants or professional advisors to Sellers who were paid
more than $10,000 by Sellers during the first six months of 1997;
together, in the case of officers and employees of Sellers, with the current
rate of compensation payable to each.
3.22 Indebtedness to and from Directors, Officers and Others. Except as set
forth on Schedule 3.22, (a) no Seller or other Seller is indebted to any
director, officer, employee or agent of any Seller or other Seller except for
amounts due as normal salaries, wages and bonuses and in reimbursement of
ordinary expenses on a current basis and (b) no officer, employee or agent of
any Seller or other Seller is indebted to any Seller or other Seller.
3.23 Outside Financial Interests. Except as identified on Schedule 3.23
hereto, no director or officer of any Seller has any direct or indirect
financial interest in any competitor with or supplier or customer of any such
Seller; provided, however, that for this purpose ownership of corporate
securities having no more than 2% of the outstanding voting power of any
competitor, supplier or customer for which securities are listed on any national
securities exchange or authorized for quotation on the Automated Quotations
System of the National Association of Securities Dealers, Inc. shall not be
deemed to be such a financial interest provided such Person has no other
connection or relationship with such competitor, supplier or customer.
3.24 Payments, Compensation and Perquisites of Agents and Employees. To the
Knowledge of Sellers, (a) all payments to agents, consultants and others made by
any Seller or other Seller in connection with the Business have been in payment
of bona fide fees and commissions and not as bribes, illegal or improper
payments, (b) each Seller or other Seller has properly and accurately reflected
on its books and records all compensation paid to and perquisites provided to or
on behalf of its consultants, agents and employees, and (c) such compensation
and perquisites have been properly and accurately disclosed in the Financial
Statements and Interim Statements and other public or private reports, records
or filings of any Seller or other Seller, to the extent required by Law.
3.25 Labor Contracts, Employee Benefit Plans, and Employment Contracts.
Except as set forth on Schedule 3.25 hereto, no Seller is a party to (a) any
union collective bargaining, works council, joint or multi-employer association,
employee committee or similar Contract, (b) any Plan or (c) any employment
Contract. True, correct and complete copies of all documents creating or
evidencing any such Contract or Plan listed on Schedule 3.25 have been delivered
to Buyer. There are no negotiations, demands or proposals which are pending or
which have been made since January 1, 1994 which concern matters now covered, or
that would be covered, by the type of Contracts or Plans listed in this Section.
3.26 ERISA.
(a) All Plans disclosed on Schedule 3.26 comply in all material
respects with, and have been operated and maintained in compliance with, the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and all
other applicable Laws, to the extent applicable. No"reportable event" (as
defined in Section 4043(b) of ERISA) or"prohibited transaction" (as defined in
Section 4975(c)(1) of the Code or Section 406 of ERISA) has occurred with
respect to any Plan and, except as may result from Closing, there is no fact or
circumstance which may lead to the occurrence of any reportable event or
prohibited transaction. Sellers do not maintain and are not required to
contribute to, nor have they ever maintained or been required to contribute to
(i) a defined benefit pension plan or (ii) a defined contribution plan which
requires minimum contributions.
(b) No Seller or Sellers has ever been a party to or participant in,
or been required to contribute to, any multi-employer plan (as defined in
Section 3(37) of ERISA).
(c) All Sellers have complied in all material respects with the health
care continuation requirements of the Consolidated Omnibus Budget Reconciliation
Act of 1985, as amended ("COBRA").
3.27 Terminated Plans. To their respective Knowledge, no Seller has
terminated or taken action to terminate any employee benefit plan. None of
Sellers, nor any Seller, has any liability to any Person or entity, including
without limitation the Pension Benefit Guaranty Corporation, any other
Government agency or any participant in or beneficiary of any employee plan of
another entity, and none of Sellers is liable for any excise, income or other
tax or penalty as a result of the termination of any employee benefit plan.
3.28 Overtime, Back Wages, Vacation and Minimum Wages. To the Knowledge of
each Seller, no present or former employee of such Seller has any claim against
the Sellers Group (whether under U.S., federal, state or local law, foreign law,
any employment agreement, or otherwise) on account of or for (a) overtime pay,
other than overtime pay for the current payroll period, (b) wages or salary
(excluding current bonus, accruals and amounts accruing under pension and
profit-sharing plans) for any period other than the current payroll period, (c)
vacation, time off or pay in lieu of vacation or time off, other than that
earned in respect of the current fiscal year or (d) any violation of any
statute, ordinance or regulation relating to minimum wages or maximum hours of
work.
3.29 Discrimination and Occupational Safety and Health. To the Knowledge of
each Seller, except as set forth on Schedule 3.20, (a) no Person or party
(including, but not limited to, any Government) has any claim, or basis for any
action or proceeding, against such Seller arising out of any statute, ordinance
or regulation relating to discrimination in employment or employment practices
or occupational safety and health standards, and (b) since formation, no Seller
or other Seller has received any notice from any U.S. federal, state, local or
foreign Government alleging a violation of occupational safety or health
standards.
3.30 Alien Employment Eligibility. To the Knowledge of each Seller, with
respect to each Person employed by such Seller or of Sellers on or after May 1,
1987, and who actually commenced such employment on or after November 6, 1986,
(a) such Seller hired such Person in compliance with the Immigration Reform and
Control Act of 1986 and the rules and regulations thereunder ("IRCA") and (b)
each of Sellers and/or each Seller has complied with all recordkeeping and other
regulatory requirements under IRCA.
3.31 Labor Disputes; Unfair Labor Practices. There is neither pending nor,
to the Knowledge of any Seller, threatened, any labor dispute, strike or work
stoppage which affects or which may affect the Business, and no Seller is
currently covered by any injunction issued by any Court. Since January 1, 1994,
to the Knowledge of each Seller, neither it nor its agents, representatives or
employees of each of them, has committed any unfair labor practice as defined in
the National Labor Relations Act of 1947, as amended. To the Knowledge of each
Seller, (a) there is not now pending or threatened any charge or complaint
against such Seller by the National Labor Relations Board, any state or local
labor or employment agency or any representative thereof, and the execution of
this Agreement and the Closing hereunder will not result in any such charge or
complaint, nor is there pending or threatened any grievance or arbitration under
any labor or employment Contract, (b) no right of representation by a labor
organization exists respecting the employees of such Seller, nor is there
pending a representation election, (c) no collective bargaining Contract is
currently being negotiated and no organizing effort is currently being made with
respect to the employees of such Seller, and (d) no such Seller has any ongoing
or future liabilities or obligations under any settlement Contract or consent
decree.
3.32 Insurance Policies. Set forth on Schedule 3.32 hereto is a list of all
insurance policies and bonds in force covering or relating to the Purchased
Assets or the Business, including without limitation all properties, operations
or personnel of each of Sellers.
3.33 Guarantees. None of Sellers is a guarantor, indemnitor, surety or
accommodation party or otherwise liable for any indebtedness of any other
Person, firm or corporation, except as endorser of checks received and deposited
in the Ordinary Course of the Business.
3.34 Environmental Matters
(a) To the Knowledge of Sellers and except as set forth on Schedule
3.34, the Premises and all current uses and any previous uses by a Seller have
been and are in compliance with all Legal Requirements. Except as set forth in
Schedule 3.34, each Seller has, to its Knowledge, properly obtained and is in
compliance with all material and necessary permits, registrations, approvals,
and licenses and has properly made all filings with and any submissions to any
Legal Authority required by any Legal Requirement. To the Knowledge of Sellers,
as applicable, no deficiencies have been asserted or alleged by any such Legal
Authority with respect to such items.
(b) Except as forth on Schedule 3.34, to the Knowledge of any Seller
Group Person, there has been no spill, discharge, leak, leaching, emission,
migration, injection, disposal, escape, dumping or release of any kind on
beneath, above, or into the Premises or into the environment surrounding the
Premises of any Hazardous Materials, including without limitation those
materials regulated by any Legal Requirement.
(c) Except as set forth on Schedule 3.34, there are and have been to
the Knowledge of any Seller Group Person, no (i) Hazardous Materials stored,
disposed of, generated, manufactured, refined, transported, produced or treated
at, upon or from the Premises; (ii) asbestos fibers on, in or beneath the
Premises or (iii) underground storage tanks on or beneath the Premises.
(d) Each Seller has delivered to Buyer, as part of the execution and
delivery of this Agreement, complete copies of any and all documents received by
such Seller from or submitted to any Legal Authority relating to the environment
condition of the Premises and any reviews, audits, reports or other analyses
concerning the Premises conducted by the Sellers, any prospective purchaser or
any other party whether or not such reviews, audits, reports or other analyses
were submitted to any Legal Authority.
(e) Except as set forth in Schedule 3.34, no Seller has Knowledge of
any civil, criminal or administrative action, suit, summons, citation,
complaint, claim, notice, demand, request, judgment, order, lien, proceeding,
hearing, study, inquiry or investigation based on or related to any Legal
Requirement related to environmental matters concerning the Premises and
applicable to such Seller.
(f) For purposes of this Section 3.34,"Hazardous Materials" shall mean
any flammable, explosive, radioactive, toxic, infectious, hazardous substance,
waste, pollutant, contaminant, chemical, waste, or other or other material,
including but not limited to petroleum including crude oil or any fraction
thereof, asbestos fibers or solid waste, defined or regulated under any Legal
Requirements; "Legal Authority" shall mean any federal, state, county, municipal
or other governmental department, commission, board, bureau, court, agency, or
instrumentality having jurisdiction or authority over the Premises or its
operations;"Legal Requirement" shall mean any law, statute, code, rule,
regulation, ordinance, order, judgment, decree, writ, injunction, franchise,
permit, certificate, license, authorization, registration, or other direction or
requirement of any Legal Authority, applicable to the Premises.
3.35 Broker's Fees. None of Sellers nor any other member of Sellers Group
has retained any broker, finder or agent or agreed to pay any brokerage fees,
finder's fees or commissions with respect to the transactions contemplated by
this Agreement.
3.36 Foreign Assets. None of Sellers has an interest in any real property
or tangible or intangible property located outside of the United States,
including any stock, securities or investments in, claims against, or
receivables from any entities or Persons with substantially all their property
or business so located.
3.37 Foreign Operations and Export Control. No Seller has conducted the
Business outside the United States.
3.38 Books and Records. The books of account, stock record books and minute
books and other corporate records of each of Sellers are in all material
respects complete and correct, have been maintained in accordance with good
business practices and the matters contained therein are accurately reflected on
the Financial Statements and Interim Statements, to the extent appropriate.
3.39 Truthfulness. The representations and warranties of Sellers herein and
the statements and certificates furnished or to be furnished by or on behalf of
Sellers pursuant to this Agreement are and will be materially true and correct.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer and OSI hereby make the following representations and warranties,
each of which is true and correct on the date hereof and each of which shall
survive the Closing Date and the sale contemplated hereby pursuant to Section
9.1.
4.1 Corporate Existence of Buyer. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Colorado.
Buyer has the corporate power and authority to own and use its properties and to
transact the business in which it is engaged. OSI is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. OSI has the corporate power and authority to own and use its
properties and to transact the business in which it is engaged.
4.2 Approval of Agreement. The execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby have been duly
authorized and approved by all necessary corporate action of Buyer and OSI, and
such authorization and approval have not been revoked. Pursuant to such
authorization and approval, each of Buyer and OSI has full power and authority
to enter into this Agreement and the Employment Agreements, and to perform its
obligations hereunder, and to consummate the transactions contemplated hereby.
4.3 No Breach of Articles or Indentures. The execution of this Agreement
and the consummation of the transactions contemplated hereby have not and will
not constitute or result in the breach of any of the provisions of, or
constitute a default under any material indenture, evidence of indebtedness or
other commitment to which Buyer or OSI is a party or by which either is bound,
which breach or default would have a material adverse effect on OSI and its
subsidiaries, taken as a whole. The execution of this Agreement and the
consummation of the transactions contemplated hereby have not and will not (a)
constitute or result in the breach of any of the provisions of the articles of
incorporation or by-laws of Buyer or the certificate of incorporation or by-laws
of OSI or (b) except with respect to H-S-R and any state license or permit
requirements related to the collection of debts, require any consent, approval
or authorization of, of filing of any certificate, notice application, report or
other document with any Government.
ARTICLE V
COVENANTS CONCERNING SELLERS
Each of Sellers covenants and agrees with Buyer that, from and after the
date of this Agreement and until the Closing Date, each of Sellers will conduct
the Business subject to the provisions and limitations in Sections 5.1 through
5.5:
5.1 Operation of the Business. Without the prior written consent of Buyer,
no Seller will:
(a) Except in the Ordinary Course, grant any increase in the rate of
pay of any of its employees, grant any increase in the salaries of any officer,
employee or agent, enter into or increase the benefits provided under any bonus,
profit-sharing, incentive compensation, pension, retirement, medical,
hospitalization, life insurance or other insurance plan or plans, or other
contracts or commitments, or in any other way increase in any amount the
benefits or compensation of any such officer, employee or agent.
(b) Enter into any employment Contract or collective bargaining
agreement.
(c) Enter into any Contract or engage in any transaction which is not
in the usual and Ordinary Course of the Business or which is inconsistent with
past practices.
(d) Sell or dispose of or encumber any Assets except in the Ordinary
Course.
(e) Make, or enter into any Contract for, any capital expenditure or
enter into, modify, amend, or cancel any lease of capital equipment or real
property.
(f) Enter into any Contract, whether for the purchase or sale of
inventory, supplies, other products or services or otherwise except in the
Ordinary Course.
(g) Create, assume, incur or guarantee any indebtedness other than (i)
in the usual and Ordinary Course of the Business and with a maturity date of
less than one year or (ii) that incurred pursuant to existing Contracts
disclosed in the Schedules delivered pursuant to this Agreement.
(h) Declare or pay any dividend or make any sale of or distribution in
respect of its capital stock or directly or indirectly redeem, purchase or
otherwise acquire any of its capital stock.
(i) Make or institute any unusual or novel method of transacting
business or change any accounting procedures or practices or its financial
structure.
(j) Make any amendments to or changes in its articles or certificate
of incorporation or association or bylaws.
(k) Perform any act, or attempt to do any act, or permit any act or
omission to act, which will cause a breach of any material Contract.
(l) Take any action or incur any liability or obligation which, if
taken or incurred prior to the date of this Agreement, would be required to be
disclosed on any Schedule hereto.
5.2 Preservation of Business. Each Seller shall:
(a) Carry on the Business in the Ordinary Course diligently and
substantially in the same manner as heretofore conducted.
(b) Keep its business organization intact, including keeping available
the services of its present employees and preserving its present relationships
with suppliers and customers and others having business relations with it.
(c) Perform all obligations required to be performed by it under any
Contract or lease.
5.3 Insurance and Maintenance of Property. Sellers and each Seller will
maintain all insurance policies and bonds set forth on Schedule 3.32, and will
maintain the Purchased Assets in good condition and repair.
5.4 Full Access. Representatives of Buyer shall have full access at all
reasonable times to all premises, properties, books, records, Contracts, tax
records and documents of Sellers relating to the Business, and Sellers will
furnish to Buyer any information in respect of the Business as Buyer may from
time to time request. Such examination and investigation by Buyer shall not
affect the warranties and representations of Sellers contained in this
Agreement.
5.5 Books, Records and Financial Statements. Each of Sellers shall maintain
its books and financial records in accordance with the past practices of such
Seller. Said books and financial records shall fairly and accurately reflect the
operations of the Business. Each of Sellers shall furnish to Buyer promptly, as
available, financial statements and operating reports applicable to the Business
since September 30 1997, all of which shall be prepared in accordance with past
practices of such Seller and shall present fairly the financial position and
results of operations of the Business at the dates and for the periods
indicated.
5.6 Governmental Filings. Each of Sellers will cooperate with Buyer in
making, as soon as practicable following the execution hereof, all filings
required by any Government in connection with the transactions contemplated by
this Agreement. All information provided by Sellers in connection with such
filings will be true, accurate and complete and will comply with all applicable
laws and regulations.
5.7 Tax Matters.
(a) The Parties agree that the amount for reserved taxes on the
Closing Date Balance Sheet will be broken down on a schedule to the Closing Date
Balance Sheet into its separate components, with each component identifying the
specific taxable period and specific Tax for which a particular reserve is being
created or continued (each separate component being referred to herein as
a"Reserve").
(b) Each of Sellers agrees to furnish, or cause to be furnished, to
Buyer, upon request, as promptly as practicable, such information and assistance
(including access to books and records) relating to the Purchased Assets and the
Assumed Liabilities as is reasonably necessary for the preparation of any Tax
Return, claim for refund or audit or prosecution or defense of any claim, suit
or proceeding relating to any Taxes.
(c) All real estate, personal property, ad valorem and any other local
or state taxes relating to the Purchased Assets or the Business which shall be
accrued but unpaid as of the Closing Date, or which shall be paid as of the
Closing Date but relate in whole or in part to periods after the Closing Date,
shall be prorated to the Closing Date and shall be reflected on the Closing Date
Balance Sheet. Any such prorated taxes which may be ultimately assessed after
the Closing Date shall be paid by Sellers to Buyer or Buyer to Sellers, as the
case may be, within 30 calendar days of such determination.
5.8 Employees. As of 12:01 a.m. on the Closing Date, (but for financial
reporting purposes as of the Effective Time) all employees of each Seller shall
cease to be employees of each Seller and shall become employees of the Buyer. At
Closing, each Seller shall transfer sponsorship to Buyer of all of the Plans set
forth on Schedule 5.8(b) and Buyer agrees to assume all such Plans pursuant to
the Change of Sponsorship and Assumption Agreement, in the form of Exhibit 5.8
(the"Change of Sponsorship Agreement"). Nothing in this Section 5.8 shall
prevent Buyer from terminating the employment of any individual employee for
cause or for other valid business purposes.
ARTICLE VI
CHANGE OF NAME
6.1 Change of Name. Promptly after the Closing Date, each of ABC Inc., ABC
Ohio, ABC Virginia, ABC Massachusetts, and any affiliate of Sellers, in such
manner as is reasonably requested by Buyer, shall each change its name to some
name other than"Accelerated Bureau of Collections, Inc.,","Accelerated Bureau of
Collections of Ohio, Inc.,""Accelerated Bureau of Collections of Virginia, Inc."
or"Accelerated Bureau of Collections of Massachusetts," or any variations or
abbreviations thereof (provided that names including only the term"Accelerated"
shall not be deemed a variation or abbreviation thereof), and file appropriate
notification of its change of name in all jurisdictions where such notification
is required.
ARTICLE VII
CONDITIONS TO BUYER'S OBLIGATIONS
The obligations of Buyer to consummate the transactions provided for in
this Agreement shall be subject to the satisfaction of each of the following
conditions on or before the Closing Date, subject to the right of Buyer to waive
any one or more of such conditions:
7.1 Representations and Warranties of Sellers. The representations and
warranties of Sellers and the Stockholder contained in this Agreement and in the
certificates and papers to be delivered to Buyer pursuant hereto and in
connection herewith shall be true and correct in all material respects on the
date hereof and on the Closing Date (except for changes specifically permitted
hereunder) as though such representations and warranties were made on the
Closing Date.
7.2 Performance of this Agreement. Each of Sellers and each Seller shall
have duly performed or complied in all material respects with all of the
obligations to be performed or complied with by it under the terms of this
Agreement on or prior to the Closing Date.
7.3 Material Adverse Change and Extraordinary Distributions. There shall
have been no material adverse change, actual or threatened, in the Business
(including the Purchased Assets and Assumed Liabilities), whether or not covered
by insurance, as a result of any cause whatsoever. There shall have been no
extraordinary distribution by any of Sellers, by the officers of Sellers or by
any stockholders of any assets or dividends of the Business.
7.4 Certificate of Sellers. Buyer shall have received a certificate signed
by the President and Treasurer of each of Sellers dated as of the Closing Date
and subject to no qualification certifying that the conditions set forth in
Sections 7.1, 7.2, 7.3, 7.7, 7.8, 7.9 and 7.10 hereof have been fully satisfied.
Such certificate shall be deemed a representation and warranty of Sellers and
Stockholder under this Agreement.
7.5 Opinion of Counsel. Buyer shall have received from Holland & ▇▇▇▇ LLP
counsel to the Sellers Group, an opinion dated the Closing Date, to the effect
that:
(a) Each Seller is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation. Each of
Sellers and each Seller has full power and authority to own and use its
properties and carry on its business as it is being conducted immediately prior
to the Closing Date.
(b) This Agreement has received all requisite approval by the
stockholders and by the Board of Directors of each of Sellers, has been duly
executed and delivered by each Sellers Group Person, and is binding and
enforceable against each Sellers Group Person in accordance with its terms,
except as the enforceability thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and (ii) general principles of equity
(regardless of whether enforceability is considered in a proceeding in equity or
at law).
Such opinion shall be addressed to Buyer and OSI and shall provide that such
opinion may also delivered to and relied upon by the agents and lenders under
OSI's Amended and Restated Credit Agreement, dated as of October 8, 1997.
7.6 Employment Agreements. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ shall have executed and
delivered an Employment Agreement in substantially the form attached hereto as
Exhibit 7.6(a), ▇▇▇▇▇ ▇▇▇▇▇ shall have executed and delivered an Employment
Agreement in substantially the form attached hereto as Exhibit 7.6(b), and ▇▇▇▇
▇▇▇▇▇▇ shall have executed and delivered an Employment Agreement in
substantially the form attached hereto as Exhibit 7.6(c).
7.7 No Lawsuits. No suit, action or other proceeding or investigation shall
be threatened or pending before or by any Court or Government concerning this
Agreement or the consummation of the transactions contemplated hereby, or in
connection with any claim against any Seller or of Sellers not disclosed on the
Schedules hereto. No Government shall have threatened or directed any request
for information concerning this Agreement, the transactions contemplated hereby
or the consequences or implications of such transaction to Buyer or to Sellers,
or any officer, director, employee or agent of any of them.
7.8 No Restrictions. There shall exist no material restrictions or
reservations affecting the title to or utility of the Purchased Assets which
would prevent Buyer from occupying and utilizing the Purchased Assets, or any
part thereof, to the same full extent that Sellers might continue to do so if
the sale and transfer contemplated hereby did not take place.
7.9 Consents. All consents and approvals necessary to ensure that Buyer
will continue to have in all material respects the same full rights in respect
to the Purchased Assets as Sellers had immediately prior to the consummation of
the transaction contemplated hereunder shall have been obtained; provided,
however, Sellers shall not be required to obtain the consents required in
customer agreements, lease agreements (other than the lease for the Englewood,
Colorado facility), and licenses.
7.10 Releases. Prior to the Closing Date, Sellers shall have delivered to
Buyer the written release of all Liens other than Permitted Liens relating to
the Purchased Assets executed by the holder of or parties to each such Lien. The
releases shall be satisfactory in substance and form to Buyer and its counsel.
7.11 Documents. Buyer shall have received from each of Sellers on the
Closing Date:
(a) Bills of Sale and other appropriate documents conveying to Buyer
good and marketable title to the Purchased Assets.
(b) The Assignment and Assumption Agreement and other appropriate
assignments, with related consents, if any are so required.
(c) The Change of Sponsorship Agreement.
7.12 Further Assurances. Buyer shall have received such further instruments
and documents as may reasonably be required to carry out the transactions
contemplated hereby and to evidence the fulfillment of the agreements herein
contained and the performance of all conditions to the consummation of such
transactions.
ARTICLE VIII
CONDITIONS TO SELLERS' OBLIGATIONS
The obligations of Sellers to consummate the transactions provided for in
this Agreement shall be subject to the satisfaction of each of the following
conditions on or before the Closing Date, subject to the right of Sellers to
waive any one or more of such conditions:
8.1 Representations and Warranties of Buyer. The representations and
warranties of Buyer contained in this Agreement and in the certificates and
papers to be delivered to Sellers pursuant hereto and in connection herewith
shall be true and correct in all material respects on the date hereof and on the
Closing Date (except for changes specifically permitted hereunder) as though
such representations and warranties were made on the Closing Date.
8.2 Performance of this Agreement. Buyer shall have duly performed or
complied in all material respects with all of the obligations to be performed or
complied with by it under the terms of this Agreement on or prior to the Closing
Date.
8.3 Certificate of Buyer. Sellers shall have received a certificate signed
by an officer of Buyer dated as of the Closing Date and subject to no
qualification certifying that the conditions set forth in Sections 8.1 and 8.2
hereof have been fully satisfied. Such certificate shall be deemed a
representation and warranty of Buyer hereunder.
8.4 Employment Agreements. Buyer and OSI shall have executed and delivered
Employment Agreements in substantially the form attached hereto as Exhibits
7.6(a), 7.6(b) and 7.6(c).
8.5 Payment of Closing Consideration and Assumption of Assumed Liabilities.
On the Closing Date, Sellers shall have received from Buyer the Closing
Consideration, the Assignment and Assumption Agreement and the Change of
Sponsorship Agreement.
8.6 Further Assurances. Sellers shall have received such further
instruments and documents as may reasonably be required to carry out the
transactions contemplated hereby and to evidence the fulfillment of the
agreements herein contained and the performance of all conditions to the
consummation of such transactions.
ARTICLE IX
INDEMNIFICATION
9.1 Survival of Representations and Warranties. The representations and
warranties made in this Agreement shall survive the Closing and sale
contemplated hereby for a period of 12 months from the Closing Date; provided,
however the foregoing shall not apply to representations and warranties under
Section 3.8, which shall survive until the expiration of the applicable statute
of limitations, and Section 3.2 and the last sentence of Section 3.14, which
shall survive without limitation hereunder.
9.2 Sellers' Indemnification. Each Sellers Group Person, jointly and
severally, hereby agrees to hold Buyer, OSI and the shareholders, directors,
officers, successors, assigns and agents of each of them (the"Buyer Indemnified
Persons") harmless and indemnify each of them from and against, and waives any
claim for contribution or indemnity against Buyer Indemnified Persons with
respect to, any and all claims, losses, damages, liabilities, expenses or costs
("Losses"), plus reasonable attorneys' fees and expenses incurred in connection
with Losses and/or enforcement of this Agreement, plus interest from the date
incurred through the date of payment at the prime lending rate of Citibank N.A.
from time to time prevailing (in all,"Indemnified Losses") incurred or to be
incurred by any of them (a) to the extent resulting from or arising out of any
breach or violation of the representations, warranties of any Sellers Group
Person contained in this Agreement, (b) to the extent resulting from or arising
out of any breach or violation of the covenants or agreements of any Sellers
Group Person contained in this Agreement, including the provisions of this
Article IX, and (c) to the extent resulting from or arising out of any liability
or obligation of any Sellers Group Person not expressly assumed by Buyer
hereunder.
9.3 Buyer's Indemnification. Buyer and OSI hereby agree to hold Sellers and
the Stockholder (the"Sellers Indemnified Persons") harmless and indemnify each
of them from and against any and all Indemnified Losses incurred or to be
incurred by any of them, (a) to the extent resulting from or arising out of any
breach or violation of the representations, warranties, covenants and agreements
of Buyer and OSI contained in this Agreement, including the provisions of this
Article IX and (b) to the extent from or arising out of any Assumed Liability.
9.4 Notice of Claim. In the event that Buyer seeks indemnification on
behalf of a Buyer Indemnified Person, or any of Sellers seeks indemnification on
behalf of a Sellers Indemnified Person, such Party seeking indemnification
(the"Indemnified Party") shall give written notice to the Indemnifying Party
specifying the facts constituting the basis for such claim and the amount, to
the extent known, of the claim asserted. The Indemnifying Party shall pay the
amount of any valid claim not more than 30 calendar days after the Indemnified
Party provides notice to the Indemnifying Party of such amount.
9.5 Right to Contest Claims of Third Persons. If an Indemnified Party is
entitled to indemnification hereunder because of a claim asserted by any
claimant (other than an indemnified person hereunder) ("Third Person"), the
Indemnified Party shall give the Indemnifying Party reasonably prompt notice
thereof after such assertion is actually known to the Indemnified Party;
provided, however, that the right of a person to be indemnified hereunder in
respect of claims made by a Third Person shall not be adversely affected by a
failure to give such notice unless, and then only to the extent that, an
Indemnifying Party is prejudiced thereby. The Indemnifying Party shall have the
right, upon written notice to the Indemnified Party, and using counsel
reasonably satisfactory to the Indemnified Party, to investigate, secure,
contest or settle the claim alleged by such Third Person (a"Third-Person
Claim"), provided that the Indemnifying Party has unconditionally acknowledged
to the Indemnified Party in writing his or its obligation to indemnify the
persons to be indemnified hereunder with respect to such Third-Person Claim; the
Indemnified Party may thereafter participate in (but not control) the defense of
any such Third-Person Claim with its own counsel at its own expense, unless
separate representation is necessary to avoid a conflict of interest, in which
case such representation shall be at the expense of the Indemnifying Party.
Unless and until the Indemnifying Party so acknowledges his or its obligation to
indemnify, the Indemnified Party shall have the right, at its option, to assume
and control defense of the matter and to look to the Indemnifying Party for the
full amount of the costs of defense. The failure of the Indemnifying Party to
respond in writing to the aforesaid notice of the Indemnified Party with respect
to such Third-Person Claim within 20 calendar days after receipt thereof shall
be deemed an election not to defend the same. If the Indemnifying Party does not
so acknowledge his or its obligation to indemnify and assume the defense of any
such Third-Person Claim, (a) the Indemnified Party may defend against such
claim, in such manner as it may deem appropriate, including, but not limited to,
settling such claim, after giving notice of the same to the Indemnifying Party,
on such terms as the Indemnified Party may deem appropriate, and (b) the
Indemnifying Party may participate in (but not control) the defense of such
action, with its own counsel at its own expense. If the Indemnifying Party
thereafter seeks to question the manner in which the Indemnified Party defended
such Third-Person Claim or the amount or nature of any such settlement, the
Indemnifying Party shall have the burden to prove by clear and convincing
evidence that conduct of the Indemnified Party in the defense and/or settlement
of such Third-Person Claim constituted gross negligence or willful misconduct.
The Parties shall make available to each other all relevant information in their
possession relating to any such Third-Person Claim and shall cooperate in the
defense thereof.
9.6 Limitations. The Buyer Indemnified Persons shall not be entitled to
recover or seek to recover Indemnified Losses (a) to the extent such Indemnified
Losses exceed $2,500,000, once any Sellers Group Person has made payments to or
on behalf of Buyer Indemnified Persons with respect to such Indemnified Losses
in such amount; or (b) for a breach of a representation or warranty (other than
those in Section 3.2, Section 3.6 and the last sentence of Section 3.14) unless
such Indemnified Losses exceed $250,000 in the aggregate, and only to the extent
such Indemnified Losses exceed such amount.
ARTICLE X
MISCELLANEOUS
10.1 Assignment; Binding Agreement.
(a) This Agreement and all or any part of Buyer's rights and
obligations hereunder may be assigned by Buyer at any time to any one or more
Affiliates of Buyer. Buyer shall cause such Affiliate(s) to perform any of
Buyer's obligations hereunder which are assigned to such Affiliate(s).
(b) Neither this Agreement nor any of the Sellers Group's rights or
obligations hereunder may be assigned by any member of the Sellers Group without
Buyer's prior written consent.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and to their respective successors and permitted
assigns.
10.2 Termination of Agreement. This Agreement and the transactions
contemplated hereby may be terminated prior to the Closing Date only as follows:
(a) By mutual consent of Buyer and Sellers.
(b) By either Buyer or Sellers if the Closing shall not have occurred
on or before November 30, 1997, or such other date, if any, as Buyer and Sellers
shall agree upon.
10.3 Manner and Effect of Termination.
(a) Any action by Sellers to terminate this Agreement and the
transactions contemplated hereby, as provided in Section 10.2 hereof, shall be
taken by the Sellers Group Representative (as defined in Section 10.14). Any
such action by Buyer shall be taken by its Chairman of the Board, its President
or any appropriately authorized officer.
(b) If this Agreement is terminated pursuant to Section 10.2 hereof
without fault of either party or breach of this Agreement, all obligations of
Sellers and Buyer hereunder shall terminate, without liability of Sellers to
Buyer or of Buyer to Sellers. In such event, each party hereto shall pay all
legal and other costs and expenses incurred by such party in connection with
this Agreement and the transactions contemplated hereby.
(c) Nothing in this Section or elsewhere in this Agreement shall
impair or restrict the rights of any party to any and all remedies at law or in
equity in the event of a breach of or default under this Agreement.
10.4 Non-Disclosure of Information. Without the prior written consent of
Buyer, except as required by law, Sellers will not disclose or reveal to any
third Person any confidential, non-public or commercially valuable information
(a) concerning Buyer to which Sellers were exposed in connection with this
Agreement, (b) concerning the Business or (c) the transactions contemplated by
this Agreement. Without the prior written consent of Sellers Group
Representative, except as required by law, Buyer will not disclose or reveal to
any third Person any confidential, non-public or commercially valuable
information concerning the transactions contemplated by this Agreement. Either
party shall have, in addition to other remedies available in law or equity, the
right to enjoin the other from disclosing or revealing information in violation
of this section.
10.5 Transfer Taxes and Expenses.
(a) Sellers shall pay all documentary stamp, intangible and other
transfer taxes which arise as a result of the sale of the Purchased Assets
contemplated under this Agreement.
(b) Buyer and Sellers shall use their respective reasonable efforts to
provide or obtain from any taxing authority any certificate or other document
necessary to mitigate, reduce or eliminate any Taxes (including additions
thereto or interest and penalties thereon) that otherwise would be imposed with
respect to the transactions contemplated in this Agreement.
10.6 Bulk Sales. Buyer hereby waives compliance with any applicable State
Uniform Commercial Code or other statutory provisions governing bulk sales.
Sellers agree to indemnify, defend and hold harmless Buyer from any and all
loss, cost or expenses, resulting from the assertion of claims made against the
Purchased Assets sold hereunder or against Buyer by creditors of Sellers under
any bulk sales law with respect to liabilities and obligations of Sellers not
assumed by Buyer hereunder, such indemnity to be in accordance with the
provisions of Article IX hereof.
10.7 Remedies. Nothing contained herein is intended to or shall be
construed to limit the remedies which either party may have against the other in
the event of a breach of or default under this Agreement, it being intended that
any remedies shall be cumulative and not exclusive.
10.8 Entire Agreement and Modification. This Agreement, including the
Schedules attached hereto and the documents to be delivered pursuant to Article
VII and Article VIII, and Exhibits, constitutes the entire agreement between the
parties. No changes of, modifications of, or additions to this Agreement shall
be valid unless the same shall be in writing and signed by all parties hereto.
10.9 Severability. If any provision of this Agreement shall be determined
to be contrary to law and unenforceable by any court of law, the remaining
provisions shall be severable and enforceable in accordance with their terms.
10.10 Counterparts. This Agreement may be executed in one or more identical
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument. This Agreement may be
executed and thereafter transmitted by telecopier, and the telecopier receipt
shall constitute an original.
10.11 Headings; Interpretation. The table of contents and article and
section headings contained in this Agreement are inserted for convenience only
and shall not affect in any way the meaning or interpretation of the Agreement.
Both parties have participated substantially in the negotiation and drafting of
this Agreement, and each party hereby disclaims any defense or assertion in any
litigation or arbitration that any ambiguity herein should be construed against
the draftsman.
10.12 Governing Law. This Agreement shall be construed and interpreted
according to the laws of the State of Colorado without regard to the conflict of
laws rules of such state.
10.13 Payment of Fees and Expenses. Each Party hereto shall pay all fees
and expenses incurred by such Party incident to the negotiation, preparation and
execution of this Agreement and the consummation of the transaction contemplated
hereby, including the fees of counsel, accountants and other experts of such
Party and any finder's or brokerage fees incurred by such Party.
10.14 Sellers Group Representative By execution and delivery of this
Agreement, each Sellers Group Person hereby constitutes and appoints ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇ as the representative of such person hereunder (the"Sellers Group
Representative") with full power and authority to give or make all notices,
objections, directions and other communications to be given or made by or on
behalf of any Sellers Group Person, to take any actions or give any consents of
waivers which may be taken or given by or on behalf of any Sellers Group Person,
to bind and act on behalf of the Sellers Group with respect to any matters which
may arise or in connection with this Agreement and the exhibits hereto (but
excluding the Employment Agreements) and to otherwise act for and on behalf of
the Sellers Group (except in connection with the Employment Agreements). In the
event that the Sellers Group Representative should die or become incapacitated,
his successor shall be selected by the estate or personal representative of
Sellers Group Representative, and written notice of such selection shall be
given to Buyer and OSI.
10.15 Liabilities After Effective Time. Except as otherwise provided in
this Agreement, Liabilities incurred by Buyer with respect to the Purchased
Assets after the Effective Time shall be Liabilities of Buyer.
10.16 Notices. All notices, requests, demands and other communications
hereunder shall be deemed to have been duly given if the same shall be in
writing and shall be delivered (i) personally, (ii) by registered or certified
mail, postage prepaid, (iii) by facsimile transmission or (iv) by overnight
delivery service and addressed as set forth below:
(a) If to Buyer or OSI:
Outsourcing Solutions, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
copy to:
▇▇▇▇▇ ▇▇▇▇ LLP
One ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
(b) If to any member of the Sellers Group:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Accelerated Bureau of Collection, Inc.
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
copy to:
Holland & ▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. Safty
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any such notice shall be effective upon receipt. Any party may change the
address to which notices are to be addressed by giving the other parties notice
in the manner herein set forth.
THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION WHICH MAY BE ENFORCED BY THE
PARTIES HERETO.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement, on
the day and year first above written.
ABC ACQUISITION COMPANY
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------
OUTSOURCING SOLUTIONS INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
--------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Executive Officer
ACCELERATED BUREAU OF COLLECTIONS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
ACCELERATED BUREAU OF COLLECTIONS OF OHIO, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
ACCELERATED BUREAU OF COLLECTIONS OF VIRGINIA, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
ACCELERATED BUREAU OF COLLECTIONS OF MASSACHUSETTS, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
TABLE OF SCHEDULES
1.1(b) Excluded Assets
1.1(c) Permitted Liens
2.5 Allocation of Consideration by Seller
3.4 Events Subsequent to December 31, 1996
3.5 Assets in Possession of Others
3.12(a) Real Property - Leased to Sellers
3.12(b) Personal Property - Leased to Sellers
3.13 Intellectual Property
3.16 Licenses and Permits
3.17 Contracts--Disclosure
3.20 Litigation and Arbitration
3.21 Directors, Officers, Employees and Consultants
3.23 Outside Financial Interests
3.25 Employee Benefit Plans and Employment Contracts
3.26 ERISA
3.32 Insurance Policies
3.34 Environmental Matters